In its newest budget, the Ontario government has announced that drivers in the province can choose to opt-out of DCPD coverage for their auto insurance coverage.

But what does this really mean for your insurance and is opting out a good idea?

Let’s get into it…

What is Direct Compensation-Property Damage DCPD

With DCPD coverage, if you get in a car accident where someone else is at fault, you are covered for any damage to your vehicle and/or its contents. This also includes the loss of use of the car or contents. For this coverage, the accident must have taken place in Ontario, with at least one other vehicle involved that is insured by an Ontario insurance company. You are directly compensated by your insurer in such no-fault insurance claims – in other words, you don’t need to wait for the assessment by the responsible driver’s insurance company.

Once mandatory, but no longer

DCPD coverage used to be mandatory in Ontario – one of four coverages that made up the minimum coverage require to insure a car (learn more about mandatory auto insurance coverage in Ontario here). Now, what the government is saying is that this coverage is optional for drivers in the province.

Should you opt-out?

While this is a very personal decision, the fact of the matter is that opting out puts you at financial risk in the event that you were to get in an accident. You would no longer be compensated for the repair or replacement of your vehicle, or any of its contents, or loss of use if you get in an accident.

Yes, opting out means that your insurance premiums will be cheaper, but it’s crucial to take into account the ramifications of doing so. It’s very important that you discuss with your insurance broker or company before choosing to forgo DCPD coverage.

If you drive an older car, one that is worth less than what you pay to insure it, this may be grounds for considering the opt-out. But again, discuss with your provider before making this choice.

Criticism of the move suggests that the government is trying to make it seem like they are working to lower insurance premiums, something very important to Ontarians who pay some of the highest auto insurance rates in the country, but by offering an option that is really not a wise decision.

Resources referenced from the Canadian Underwriter:

• What Ontario’s DCPD change means for insureds, brokers
• Brokers, insurers respond to 2023 Ontario budget

With the cost of living here in Ontario reaching such critical levels, finding ways to cut costs is certainly top of mind for many of us. Please don’t hesitate to reach out to one of our insurance specialists to learn more about what opting out of DCPD would mean for you and if it’s the right fit for your situation. We’re here to get you cheaper insurance, but also to make sure that you are properly covered.

Looking for an auto insurance quote for Ontario? Head over here to access our online quote system.

This post is intended to provide general information for educational purposes only and is not meant to offer professional advice for your particular situation – only your broker or insurance company can do that. The use of the information in this post is at your discretion.